KUBER AUTO GENERAL FINANCE & LEASING LIMITED DIRECTOR'S REPORT To THE MEMBERS Your Directors have pleasure in presenting the Fifth Annual Report on the Business and operations of the company together with audited Accounts for the year ended 31 st March 1998. OPERATIONS The last Financial year witnessed slow industrial growth, compounded by a severe liquidity crunch,high cost of funds and sluggishness in the capital market. ln this financial and economic scenario of the recent past, the performance of the most NBFCs was adverselY affected. The pervasive downward slide in Indian economy in general and NBFCs in particular in the financial year 97-98 and prevailing market conditions have a telling effect on the performance of the company. The poor results are due to new regulatory framework brought out by the Reserve Bank of India in the beginning of 1998. In a nut shell,the Reserve Bank of india has introduced prudential norms, capital adequacy requirement, linking of quantum d deposit mobilization with credit rating, stricter norms for provisioning and income recognition etc. Following the issue of these guidelines, your directors decided neither to accept nor to renew existing deposits with effect from 2nd January, 1998. This has adversely affected the liquidity and profitability of your company. Given the constraints under which your company has to operate, we can conclude at performance of your company was satisfactory. Your Directors have time and again approached the Reserve Bank of India to get your company registered and classified as Hire Purchasing & Leasing company. We expect that with the latest results as made available to you, we are quite confident that our plea will be favourbly considered by the Reserve Bank of India. We are also making efforts to get credit rating for your company from an approved credit rating agency. Once we achieve these twin obJectives,we will sail through the present disappointing phase and expect to present a better picture next year. PUBIC DEPOSITS During the year under review your company has also accepted/renewed Deposits from the public and others up to 1 st January, 1998. Your Directors are pleased to inform you that the Investors have reposed their confidence in the company's ability of timely payment of interest and repayment of principal. With effect from 2nd January,98 the company has not accepted any deposits In view of the changes affected through Non -Banking Financial Companies (Reserve Bank of India) Directors,1998. There were no unclaimed deposits as on 31st March, 1998. The total deposits outstanding as on 31st March, 98 were amounting to Rs.11.92 Crore. The Company has been complying with all the directions of Reserve Bank of India as applicable to Hire Purchase & Leasing companies. PROSPECTS Your company is determined to fulfill the expectations and retirements of its clients and investors in the present business scenario by providing them high level quality services and introduction of new financial instruments. As you all know, the business scenario for Non Banking Finance Companies is likely to be more competitive In the coming years, due to the entrance of the Public Sector undertakings and Foreign Banks in the Business which was hetherto traditionally dominated by the NBFCs The Union Budget 1998-99 has also reaffirmed the hopes of the Corporate Sector about the present Governments commitment of providing liberal incentives to the Indian Industry hence we expect that the Indian Corporate sector comes out of the morass it is presently in and will head for a bright and prosperous future. To capitalise on each and every business opportunity, your company is coming up with the new area of business. For this way it is launching its consumer finance division. In order to broad base the operation of the division, the Company intends to provide funds to i;s present and prospective clients for Consumer Durables alongwith office equipments. DIRECTORS Mr. Mukesh Mohan Sharma, Director of the company retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment Mrs. Rowena Sharma,Director of the company retires by rotation at the ensuing Annual general meeting and being eligible, offers herself for reappointment. SHARE CAPITAL During the year 1997-1998 the Authorized Capital of the company has been reorganized from 15000000 equity shares of Rs.10/- each to 80,00,000 equity shares of Rs.10 each and 7,00,000 preference shares of Rs.100 each. CONSERVATlON OF ENERGY, TECHNOLOGY ABSORPTlON Particulars Under Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988 on Conservation of Energy, Technology Absorption are not Applicable. FOREIGN EXCHANGE EARNINGS AND OUTGO There was no Foreign Exchange earning and outgo during the year under review. AUDITORS M/s Alok Deepak &. Co., Chartered Accountants, retire at the fortheoming Annual General Meeting and are eligible for reappointment. As required Under Section 224 (1 B) of the Companies Act,1956 the company has obtained confirmation to the effect that their reappointment, if made, would be in conformity with the limits prescribed in the said section. AUDITORS' REPORT Regarding point no. 13 and 15 of the Auditor Report, your Directors would like to mention that the company has alread/ applied to the Reserve Bank of India for registration and classification- of your company as an Equipment Leasing & Hire Purchase company. Apart from this the management is making concerted efforts to Strengthen the Internal Audit System. INFORMATION REGARDING NON-BANKING FINANCIAL COMPANIES (RESERVE BANK OF INDIA) DIRECTION 1977 1.Total number of depositors of the company who's deposits have not been claimed by them. Nil 2. Total number of depositors who have not been paid by the company, after the date on which the deposits became due:- Nil 3. Total amount due to be deposited and remaining unclaimed or unpaid after the due date:- Nil DISCLOSURE UNDER THE LISTING AGREEMENT A. CLAUSE 43: Report with regard to the projected utility and profitability, pursuant to clause 43 of the Listing agreement with the Stock exchange (s) as under: a. Utilisation of Funds The company had mobilised Rs.4,50,00,000 from the public issue of 4,00,000 equity shares, of Rs.101- each for cash at par in January 1995. The proceeds of the the Public issue have been fully Utilised for purposes as disclosed in the prospectus. b. Projections V/s Actuals (Rs. in Lakhs) Projections Actuals Total Turnover 1527.89 1587.61 Profit(Loss) After Tax 220.09 (13.77) Equity Share Capital 700.00 700.53 Reserves 247.55 58.27 The difference between the projections and Actuals are due to the depressed financial market conditions, and new regulatory framework brought out by the Reserve Bank of India in the beginning of 1998 which has compelled the company to defer its disbursement plans. B. Clause 32: Cash flow statement pursuant to clause 32 of the Listing agreement is provided alongwith the Notes to Accounts. ACKNOWLEDGEMENT Your Directors place on record their appreciation for the valuable contribution made by all the employees and agents of the company. For and on behalf of the Board for KUBER'AUTO GENERAL FINANCE & LEASING LIMITED Place: New Delhi PRADYUMAN KUMAR SHARMA ROWENA SHARMA Date: 8.07.1998 (Managing Director) (Director)